According to J.D. Power’s latest credit card satisfaction survey, many consumers are giving their card issuers lower marks than they had before the COVID-19 pandemic. And as a credit card user, I’m beginning to place a higher value on customer service these days.
The survey was conducted in four waves from September 2019 through June 2020. The first three waves wrapped up before the virus accelerated in the U.S., and as a result, overall credit card satisfaction rose six points from 2019. But the most recent wave, conducted in May and June, found a 10-point drop.
There’s a clear pre- and post-COVID divide, which J.D. Power largely attributes to a communication gap. The firm notes that just 36% of credit card holders were contacted proactively by their card issuers during the past 12 months, well below the 60% of mortgage customers and 48% of retail banking customers who said the same. Customer satisfaction has improved in those two segments amid the pandemic.
Alarmingly for the credit card industry, an outsized decline in satisfaction (14 points) was observed in the affluent/mass affluent segment. Customers whose finances have been affected by COVID-19 also expressed a 14-point drop in their satisfaction. Denied chargeback requests and unexpected credit limit cuts appear to be two key trends contributing to cardholders’ lower satisfaction levels.
Who fared best, worst
American Express took the top satisfaction ranking away from Discover for the first time since 2017. Those two companies have occupied the top two slots dating all the way back to the study’s inception in 2007.
Amex is now a 10-time champion (2007-14, 2017 and 2020). Discover has five wins (it shared the top spot with Amex in 2014 then won solo in 2015, 2016, 2018 and 2019). As usual, those two are well ahead of the pack. The gap from second to third place is roughly the same as the spread from third to 10th.
Bank of America climbed to third after a seventh-place finish in 2019. Chase came in fourth for the third year in a row. Capital One actually improved its score slightly but dropped from third last year to fifth in 2020.
In the regional bank issuer category, Regions Bank narrowly outpaced BB&T and PNC, which tied for second. Last year, BB&T and PNC finished first and second, respectively. Regions leapfrogged all the way from fifth to first.
Few cardholders looking to switch, however
J.D. Power found 89% of cardholders believe their current cards fully meet their needs. This is a bit surprising on the face of it, but a deeper dive reveals card relationships tend to be sticky.
As much as we hear about card churners, the fact is, most people stick with their go-to cards for a long time. Only a third of cardholders swapped their most frequently used card within the past three years, according to a 2019 CreditCards.com survey. Some 30% said they had never switched and 9% last did so more than a decade ago.
“Through the first two months of 2020, credit card customer satisfaction was on track to set record highs,” said John Cabell, director of banking and payments intelligence at J.D. Power. “That all reversed course when COVID-19 entered the equation, with satisfaction, trust, advocacy and brand image attributes resulting in sharp declines in May 2020.
“We’re living in a moment of truth for card issuers, and results in the next few months will be key to determining whether this decline constitutes a lasting trend. Issuers’ ability to communicate proactively and work closely with customers to address their pain points and fears will be critical to their long-term viability.”
See related: How do credit card companies make money?
I’m thinking more about service
In my personal credit card strategy, cash back rewards are the most important factor. But I’m thinking more about customer service these days. I didn’t like it when one of my card issuers tried to cut my credit limit in half recently (although I got them to reverse the decision). I was also annoyed when I lost a dispute on a different card pertaining to a rental car reservation that I had to cancel due to COVID-19. And a third card issuer has repeatedly given me fewer rewards points than I should have earned.
Earlier this summer, I canceled a card I wasn’t using much. I’m considering putting two others on the chopping block because they’re travel-oriented cards that charge annual fees that will renew in the coming months. I’ll wait to see if the COVID situation improves or if these issuers extend additional non-travel benefits.
And I’ll consider asking for an annual fee waiver or a retention bonus to incentivize me to stick around. If all else fails, I could consider a product change and switch to a different card from each of these companies.
But I’m still thinking of simplifying my card portfolio, even if that means sacrificing some rewards. It’s probably a mix of getting older, having other priorities (like family, work and home) and more disposable income.
There’s a part of me that’s attracted to the idea of going all-in on a credit card with good (although possibly not the best) rewards that provides excellent service and ease of use. Those are benefits in their own rights, even if they’re a bit harder to quantify.
Have a question about credit cards? E-mail me at email@example.com and I’d be happy to help.